Is “Public Option” a Practical Fix or Partisan Poison?

The following online debate, hosted by the Web site Politics Daily, was moderated by KHN's John Fairhall.

Welcome to the first Politics Daily debate. There are many contentious issues in play as the Senate struggles to come up with a bipartisan health care reform bill. We asked two experts to debate perhaps the hottest topic of all: Whether to create a government-run insurance plan to compete with private insurance plans.

Our debaters on the so-called “public option” are Richard Kirsch, national campaign manager for Health Care for America Now, a coalition of more than 1,000 groups representing 30 million people, and James Gelfand, senior manager of health policy for the U.S. Chamber of Commerce, which represents 3 million businesses of all sizes. Our moderator is John Fairhall, senior editor of Kaiser Health News, a nonprofit news service covering health policy.

FAIRHALL: What are the practical advantages and disadvantages of a public plan? Is the ideological debate over the government’s proper role in health care getting in the way of a realistic discussion?

KIRSCH: As the president says, a public health insurance option is aimed at doing two things: lowering costs and keeping the insurance companies honest. Those are both real and practical and a response to the failure of private insurance to make health care affordable or to deliver quality care reliably. The ideological debate is an attempt to divert Americans from the real issues but — because we are at a time in American history in which people understand we need a strong government role to stand up to the insurance industry — it isn’t resonating.

GELFAND: The disadvantages are many — could lead to single payer, could limit choice and competition, make it so you cannot keep the plan you have. Shifts costs to those who buy insurance in the private market. Takes away many of the advantages we hope to gain through the creation of Gateways (one-stop comparison shopping for health plans, also called connectors or exchanges), specifically the market competition that could bring down costs and make insurers compete to best manage health. Also, guarantees we won’t get a measured, bipartisan bill, and instead we will have a partisan political war in which the real losers will be the American people, who need health reform.

FAIRHALL: Why would the public plan hurt businesses and their employees? Wouldn’t it help to reduce costs?

KIRSCH: It would. The head of Starbucks recently came out for the public option. The opposition from the business community really is ideological. It would be good if they realized the reason they can’t compete internationally is because we’re the only country in the world that bases health care on private insurance. It’s bankrupting our economy.

GELFAND: It’s interesting to see the fixation on a government-run plan as the answer to “profits” when there are so many non-profit health plans out there available to so many people. It begs the question, why are groups like HCAN (Health Care for America Now) so fixated on a government-run plan? They say it has nothing to do with single payer, but if this isn’t about single payer, then why has this issue become the cause de resistance for all the groups that traditionally back single payer?

FAIRHALL: I’ll rephrase James’ response into a question of my own for Richard. Enthusiasm for a public plan seems to have blinded advocates to the possibility of alternatives. Do you think there’s no other mechanism that can accomplish the same effects as a public plan?

KIRSCH: We won’t be able to drive and sustain reforms in the long run if we keep the same structures in place. For all this talk of delivery-system reforms, we need a new player in the market that has a public mission, to force other players to make reforms or fail.

GELFAND: I think there is definitely room to explore other options here. We are about to embark on the most aggressive regulatory changes ever to the private market — let’s see if it works before creating a massive new government program. Some people say they want to use a government-run plan to keep insurers honest. So a compromise might be to say that a “public option” will kick in if insurers don’t comply with the new rules, or the new rules don’t lead to more competition and better prices. It is a little bizarre to see the fixation on a Medicare-like public plan, as if people already think the rest of this massive overhaul will have no effect.

FAIRHALL: Let’s talk about Medicare: Is it a good or bad indicator of how a public plan would function?

KIRSCH: It’s mixed, which is why we want competition between both private and public insurers. If you look at most of the delivery-system reforms in legislation that is being drafted, most are pioneered by Medicare. But clearly more needs to be done. Medicare has a better record of controlling costs, despite serving a sicker population. We’d like to see Medicare and a new public insurer be less tied to the political pressures on rate setting from Congress.

GELFAND: First point of agreement of the day — I also don’t like Congress setting provider reimbursement rates!

KIRSCH: The reason that there is enormous support for Medicare among the American public is that it provides a guarantee of health coverage, from the doctor they want. It’s a basic right. We have to start there.

GELFAND: The whole “health care is a right” notion is a bit misleading. How can you have a right to other people’s money and services? If you were marooned on an island, and there was one doctor, could you say to him, “You MUST treat me, I have a RIGHT to health care”? I think health care is something we as a society have decided is important and should be provided to those who cannot afford it on their own, but that is different than calling it a “basic right.”

FAIRHALL: Some opinion surveys show strong support for a public plan. Do Americans simply not understand why critics oppose it so strongly?

GELFAND: It’s hard to know, considering there is no clear indication what kind of public plan we are going to see introduced — a Medicare-mimicking entitlement? A Schumer-Nichols plan (from Sen. Charles Schumer, D-N.Y., and economist Len Nichols) that acts mostly like a private plan? A co-op plan? Either way, we better hope a new plan wouldn’t act like Medicare, creating massive new unfunded liabilities, indebting our grandchildren to China for the foreseeable future — although we can be pretty sure it would mimic Medicare in underpaying providers, cost-shifting to the private sector, hiding administrative costs, and being rife with fraud and abuse.

KIRSCH: We actually tested all the critics’ arguments, using their words against all our arguments, and the public kept behind the public insurer every time, usually by a margin of 30 or more points.

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Is “Public Option” a Practical Fix or Partisan Poison?

June 19, 2009

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